Vaszolyi and Secretary, Department of Education, Employment and Workplace Relations

[2009] AATA 268

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 268

ADMINISTRATIVE APPEALS TRIBUNAL      )           No   2009/0053

)          

GENERAL ADMINISTRATIVE DIVISION		)
Re		EVA  VASZOLYI

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr R G Kenny, Member

Date23 April 2009 

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

..............[Sgd]................................

Member

CATCHWORDS

SOCIAL SECURITY  –  benefits and entitlements  –  newstart allowance –  applicant not a member of a couple at relevant time – applicant received lump sum payment on termination of employment – lump sum included accrued leave entitlements – liquid assets test waiting period imposed – ordinary waiting period imposed – maximum income maintenance period imposed – financial hardship of applicant not because of unavoidable or reasonable expenditure – decisions affirmed.

Social Security Act 1991 (Cth), ss 14A, 19C, 620, 621, 1068-G7AH to 1068-G7AR

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634

Re Goldfinch and Secretary, Department of Family and Community Services [2000] AATA 837

REASONS FOR DECISION

23 April 2009 Mr R G Kenny, Member     

BACKGROUND

1.      On 15 August 2008, Ms Vaszolyi ceased employment with the Department of Health and Families (Northern Territory).  On that date, she received termination payments in respect of wages and leave entitlements.  The gross amount of these was $33,427.03.  The net amount received by her was $15,086.71.  On 29 September 2008, Ms Vaszolyi claimed newstart allowance in accordance with the Social Security Act 1991 (the Act).  At that time, Ms Vaszolyi had savings in her account with the Commonwealth Bank of Australia (CBA). 

2.      Based on the amount of her termination payments, a Centrelink officer, on 23 October 2008, imposed an income maintenance period (IMP) during which Ms Vaszolyi was not able to be paid newstart allowance from 15 August 2008 until 1 February 2009. 

3.      Based on the amount in Ms Vaszolyi’s CBA account on 29 September 2008 when she claimed newstart allowance, the Centrelink officer also imposed a liquid assets test waiting period (LAWP) of 13 weeks from 16 August 2008.  For that purpose, Centrelink treated the amount in Ms Vaszolyi’s CBA account as being $19,476.  The Centrelink officer also imposed an ordinary waiting period (OWP) of one week commencing at the end of the LAWP.

4.      Those decisions were affirmed by an authorised review officer on 6 November 2008 and, in turn, by the Social Security Appeals Tribunal (the SSAT) on 16 December 2008.  The SSAT treated the level of savings in Ms Vaszolyi’s CBA account on 29 September 2008 as being $19,448.24.  Ms Vaszolyi has applied for further review by the Administrative Appeals Tribunal (the Tribunal).

ISSUES AND LEGISLATION

Liquid assets test waiting period

5.      The Act makes provision for a LAWP to be served by a newstart allowance applicant when that person has liquid assets[1].  The length of the period depends on the value of the liquid assets, which term is defined in a manner to include the monies in Ms Vaszolyi’s CBA account on 29 September 2008[2].  Centrelink determined that they amounted to $19,476.  The SSAT determined that they amounted to $19,448.24.  That latter amount appears to be consistent with an entry in a copy of Ms Vaszolyi’s CBA statement which was in evidence.  However, it was a poor copy and, as will be seen below, the difference is not material to this determination.  

[1] See s 598(1) of the Act.

[2] See s 14A(1)(b) of the Act.

6.      The calculation of the length of the LAWP is made in accordance with a formula in the Act[3].  There is a maximum period for the LAWP of 13 weeks[4].  Ms Vaszolyi conceded and I am satisfied that the application of the formula to either of the amounts noted above leads to a result that exceeds that maximum and, accordingly, the length of the LAWP in this matter is 13 weeks.  The Act provides that the LAWP commences on the day following the day on which employment ceased[5].  It is not disputed that the commencement date was 16 August 2008 or that the 13 week period ended on 14 November 2008.

[3] See ss 598(2), 598(2A) of the Act. 

[4] See s 598(2B) of the Act. 

[5] See s 598(3) of the Act.

7.      Provision is made in s 598(5) of the Act for a person to avoid serving all or part of the LAWP in some circumstances.  It reads:

“598(5)  If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while serving a liquid assets test waiting period, the Secretary may determine that the person does not have to serve the whole, or any part, of the waiting period”.

Ordinary waiting period

8.       The Act makes provision for an OWP of one week to apply to an applicant for newstart allowance[6].  It commences immediately after any LAWP that is served by the applicant[7].  It was conceded by Ms Vaszolyi and I am satisfied that this OWP was correctly applied in this matter.  The Act provides in s 620(1) that the OWP does not to apply if the person is in severe financial hardship.  It reads:

“620(1)  Subject to subsection (2), a person is subject to an ordinary waiting period unless:

...

(g)       the Secretary is satisfied that the person is in severe financial hardship”.

[6] See s 620(1) of the Act.

[7] See s 621(3) of the Act.

Income maintenance period

9.      It is not disputed that Ms Vaszolyi ceased work on 15 August 2008 or that she received a termination payment referable to various leave entitlements accrued by her on that day in the amount of $15,086.71.  The Act makes provision for particular amounts paid in respect of unused leave such as those paid to Ms Vaszolyi at the end of her employment to be treated as ordinary income for a period (ie the IMP) for the purposes of assessing the rate of payment of newstart allowance[8].  Ms Vaszolyi’s lump sum payment of $15,086.71 is assessed as income for a period equal to the length of time that it would have covered if it had been paid in weekly amounts equal to her regular wage while she was employed[9].  In the decision under review, this was calculated at 24 weeks and 2 days.  Ms Vaszolyi conceded and I am satisfied that that calculation was correctly made.  That period is calculated from the date of receipt of the termination payment.  In this case, that was the date of cessation of employment.  Accordingly, the IMP continues from 15 August 2008 until 1 February 2009.  Again, this is not disputed by Ms Vaszolyi.

[8] See ss 1068-G7AH to 1068-G7AR of the Act.

[9] See s 1068-G7AH of the Act.

10.     Provision is made in s 1068-G7AM of the Act for all or part of the IMP not to apply in some circumstances.  It reads:

“1068-G7AM  If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person”.

Severe financial hardship

11.     The term “severe financial hardship” is defined in s 19C(2) of the Act for the LAWP, OWP and IMP.  Under that provision, an applicant who is not a member of a couple who applies for newstart allowance is in “severe financial hardship” if:

“the value of the person's liquid assets … is less than the fortnightly amount at the maximum payment rate of the payment, benefit, pension or allowance that would be payable to the person:

(f)       if the person's claim were granted; and

(g)in the case of a person to whom an income maintenance period applies, if that period did not apply”.

Unavoidable or reasonable expenditure

12.     The severe financial hardship, in the case of a LAWP and an IMP, must be because the person has incurred unavoidable or reasonable expenditure during the LAWP or IMP, respectively[10].  However, for an OWP, s 620(1) of the Act does not require the difficult financial circumstances to be related to unavoidable or reasonable expenditure.

[10] See s 598(5) and s 1068-G7AM of the Act.

13.     The meaning of the term “unavoidable or reasonable expenditure” is set out in s 19C(4) the Act.  It reads:

“19C(4)  Unavoidable or reasonable expenditure, in relation to a person who is serving a liquid assets test waiting period or is subject to a seasonal work preclusion period, or a person to whom an income maintenance period applies, includes, but is not limited to, the following expenditure:

(a)the reasonable costs of living that the person is taken, under subsection (6) or (7), to have incurred in respect of:

(i)if the person is serving a liquid assets test waiting period–that part of the period that the person has served; or

(ii)if the person is subject to a seasonal work preclusion period–that part of the period that has expired; or

(iii)if an income maintenance period applies to the person–that part of the period that has already applied to the person;

(b)the costs of repairs to, or replacement of, essential whitegoods situated in the person's home;

(c)       school expenses;

(d)       funeral expenses;

(e)essential expenses arising on the birth of the person's child or the adoption of a child by the person;

(f)expenditure to buy replacement essential household goods because of loss of those goods through theft or natural disaster when the cost of replacement is not the subject of an insurance policy;

(g)       the costs of essential repairs to the person's car or home;

(h)       premiums in respect of vehicle or home insurance;

(i)        expenses in respect of vehicle registration;

(j)        essential medical expenses;

(k)any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.

However, unavoidable or reasonable expenditure does not include any reasonable costs of living other than those referred to in paragraph (a)”.

14.     In s 19C(5) of the Act, the term “reasonable costs of living”  is defined.  It reads:

“19C(5)  The reasonable costs of living of a person include, but are not limited to, the following costs:

(a)       food costs;

(b)       rent or mortgage payments;

(c)       regular medical expenses;

(d)       rates, water and sewerage payments;

(e)       gas, electricity and telephone bills;

(f)       costs of petrol for the person's vehicle;

(g)       public transport costs;

(h)any other cost that the Secretary determines is a reasonable cost of living in relation to a person”.

15.     Ms Vaszolyi submitted that the discretion which arises in the Act under s 598(5) for LAWP, under s 620(1)(g) for an OWP and under s 1068-G7AM for an IMP should be exercised in her favour to reduce the length of the LAWP, the OWP and the IMP, respectively.  Ms Brazier submitted that expenditure by Ms Vaszolyi was not in relation to unavoidable or reasonable items and that the full LAWP and IMP should be served by her.  She also submitted that the discretion should not be exercised in relation to the OWP which should be served in full.

EVIDENCE

Ms Vaszolyi

16.     Ms Vaszolyi gave the following evidence.  She is a clinical psychologist.  She is also legally blind but contact lenses give her sufficient vision to enable her to hold a driver’s licence.  Ms Vaszolyi obtained legal advice about the dismissal from her employment and initiated proceedings against her former employer.  She recently learned that settlement of these proceedings has been achieved and that this will result in her receiving a lump sum of approximately $140,000 because of the circumstances of her dismissal.  She has been receiving income support payments from Centrelink since the IMP ended on 1 February 2009.

17.     When in employment and until 31 October 2008, Ms Vaszolyi lived in rented accommodation in Alice Springs.  She had to move when that house was sold and she was able to move into the house occupied by her son and his family.  The owner of these premises allows them to live there without paying rent.  In return, they act as caretakers of the property.

18.     Ms Vaszolyi has not been in any form of employment since August 2008 and her expenditure on ordinary household and other expenses has reduced the combined balance in her bank accounts to approximately $50.  Further, she has borrowed approximately $1,000 from friends and intends to repay that when she is able to.  She has approximately $300 set aside for that purpose.

19.     The house which Ms Vaszolyi rented until the end of October 2008 was air‑conditioned.  The house which she moved to had no air-conditioning and she found it uncomfortable at night because of the heat and humidity.  One of the first things she organised was for an air-conditioning unit to be installed in her bedroom.  This cost $1,354.  Her son and his family do not have air-conditioning but use a fanning device.

20.     The cost associated with the removal of Ms Vaszolyi’s belongings to the new house was $1,764 and a further $120 was spent on tidying the garden in the rented house.  She also paid $1,500 for repairs to the air-conditioning unit in her vehicle.  A further cost to her was the legal fees associated with her challenge to her dismissal from her employment.  These were in the order of $1,500.  Ms Vaszolyi also made rent payments for the period from 16 August 2008 until the end of October 2008.  Her evidence to the SSAT was that this totalled $3,000. 

Other evidence

21.     A Customer Declaration Form was completed by Ms Vaszolyi on 21 October 2008.  It lists her assets as comprising her household effects and a motor vehicle.  She valued these at $5,000 and $4,000, respectively.  In that form, Ms Vaszolyi declared two bank accounts.  These were with the CBA and the National Australia Bank (NAB).

22.     A copy of a statement from the CBA records a payment of $15,086.71 into Ms Vaszolyi’s account on 15 August 2008.  Dates of subsequent entries are difficult to read in that copy but they are consistent with a balance of $19,448.24 as at 29 September 2008.  Various withdrawals are recorded later in September 2008 including one of $17,000 leaving a balance, at the end of September 2008, of $1,219.49.  A Transaction Details/Account Balance Summary from the NAB was also in evidence.  It records a deposit of $17,000 on 30 September 2008 as well as withdrawals of $1,980 on 3 October, $700 on 14 October 2008 and $1,300 on 17 October 2008.  The NAB balance on 17 October 2008 was $13,048.33.

23.     Before affirming the original decision on 6 November 2008, the authorised review officer spoke with Ms Vaszolyi and requested information on the state of her two accounts.  Ms Vaszolyi advised that the balances were $1,300 and $8,000.  The SSAT found that the total in her accounts at the time of its decision on 16 December 2008 was $2,500. 

24.     In evidence was an invoice and payment receipt for expenses relating to Ms Vaszolyi’s removal to her son’s residence and the cleaning of the rented premises’ yard.  These were for $1,764.47 and $120, respectively.  Receipts in relation to other expenditure were not produced by Ms Vaszolyi.

25.     Centrelink file notes in evidence reveal that, on 23 January 2009, Ms Vaszolyi advised that she had $100 in savings and was using food and fuel vouchers from the Salvation Army to assist her to survive until she would be able to receive payments from Centrelink.

CONSIDERATION 

26.     In evidence were extracts from the Guide to Social Security Law (the Guide) published by the respondent.  It provides guidance to those who administer the Act. The Tribunal is not bound to apply policy guidelines in the Guide but may do so.  It will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so[11].  In this case, there is no material before the Tribunal to indicate that the Guide should not be applied.  At s 3.1.2.10, the Guide provides that waiting periods are imposed because recipients of income support payments are expected to use their funds to support themselves before receiving Government financial support.  At s 4.3.4.10 of the Guide, that explanation is also given as the purpose of imposing an IMP[12].

[11] See Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60; Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 639-645.

[12] See also Re Goldfinch and Secretary, Department of Family and Community Services [2000] AATA 837.

27.     For LAWP, OWP and IMP, Ms Vaszolyi will be in severe financial hardship if the value of her liquid assets is less than the fortnightly amount at the maximum payment rate of the newstart allowance which would have been payable to her.  It is not in dispute that this was $544.30 per fortnight.

Liquid assets test waiting period

28.     At the time of the SSAT decision in December 2008, Ms Vaszolyi’s liquid assets were in excess of that amount.  That was after the LAWP had been served.  The requirement of s 598(5) of the Act is that there be financial hardship because Ms Vaszolyi has incurred unavoidable or reasonable expenditure while serving an LAWP.  Any expenditure Ms Vaszolyi incurred during the LAWP was not sufficient to bring her within the statutory definition of financial hardship.  She did not satisfy the requirements of being in financial hardship during that time and, accordingly, she is not able to avoid serving any part of the LAWP.

Ordinary waiting period

29.     The OWP was served from 14 to 21 November 2008.  For OWP, there is no requirement that there be a link between financial hardship and unavoidable or reasonable expenditure.  Financial hardship, as defined above, is sufficient in itself to justify not serving the OWP.  However, she served the waiting period without meeting the statutory definition.  She had still not met the requirements at the time of the SSAT hearing in December 2008.  Accordingly, she is not able to avoid serving any part of the OWP. 

Income maintenance period

30.     The first reference in the material before me to Ms Vaszolyi’s liquid assets falling below the threshold amount in the statutory definition of financial hardship is on 23 January 2009.  She declared to Centrelink at that time that she had savings of only $100 and, therefore, her liquid assets were below the $544.30 threshold.  That was during the IMP which continued until 1 February 2009.  However, financial hardship alone is not sufficient for the discretion in s 1068-G7AM of the Act to be exercised, in relation to an IMP.  It must be the case that the financial hardship was because she incurred unavoidable or reasonable expenditure during the IMP. 

31.     Only limited information has been provided by Ms Vaszolyi about her expenditure during the period from August 2008 until January 2009.  She provided documentation in relation to the removal costs and those relating to the cleaning of the yard in the rental premises.  These totalled $1,884.47.  No documentation was provided in relation to her account balances, the repair of the air-conditioning unit in her car, the installation of an air-conditioning unit in the bedroom of her present residence, her legal costs or her rental expenses. 

32.     The list of items in s 19C(4) of the Act which constitute unavoidable or reasonable expenditure does not nominate, in specific terms, removal expenses, garden tidying expenses, expenses associated with the fitting of air-conditioning units or legal costs.  Rent payments in relation to her previous premises are specifically referred to in s 19C(5) of the Act as reasonable costs of living and, therefore, are within the terms of s 19C(4).  While the list does not purport to be exhaustive, the nature of the items in the list is characterised by a high degree of necessity and I am satisfied that the general discretion at s 19C(4)(k) of the Act should be read in that way.  I am satisfied that Ms Vaszolyi’s removal costs, those costs associated with tidying the garden in the rented house, and her legal and rental expenses are unavoidable and reasonable in that sense.  However, in the case of car or home, it is the cost of essential repairs to them which is specifically nominated in s 19C(4)(g) of the Act.  While living in a hot environment makes air-conditioning desirable in both a car and a house, I am satisfied that it is not essential.  I am not satisfied that air-conditioning costs of $1,500 and $1,354 for her car and bedroom, respectively, are unavoidable.  Given Ms Vaszolyi’s limited resources and her lack of employment at the time, I am also satisfied that such expenditure was not reasonable.  In that regard, I note that her son has seen fit not to install air‑conditioning in other parts of the house.

33.     When the sums expended on air-conditioning are taken into account as being unavoidable or reasonable, Ms Vaszolyi’s liquid assets are valued at less than the threshold of $544.30.  If those sums had not been expended by Ms Vaszolyi, even when the amount of her borrowings of $1,000[13] is taken into account, she would have retained liquid assets in excess of that threshold.  Accordingly, Ms Vaszolyi’s financial hardship can not be attributed to unavoidable or reasonable expenditure.  For that reason, I am satisfied that, applying s 1068-G7AM of the Act, no part of the IMP imposed by Centrelink should be treated as not being served.

[13] At the time of the hearing, this was only $700 as $300 had been set aside by Ms Vaszolyi.

DECISION

34.     The Tribunal affirms the decision under review.

I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny.

Signed:.............[Sgd].................................................................
              Mátyás Kochárdy, Research Associate

Date of Hearing  31 March 2009
Date of Decision  23 April 2009
Ms Vaszolyi was self-represented
Solicitor for the Respondent     Michelle Brazier, Departmental Advocate